Buy-to-let mortgage rates still sliding

The cutting of the interest rate to its lowest ever level has led to record low buy-to-let mortgage rates for would-be landlords.

Those landlords looking for a longer-term deal are enjoying the best rates.

Reduced rates

Figures released by moneyfacts.co.uk suggest that the average five-year fixed rate buy-to-let mortgage at a 75% loan-to-value has slipped by 0.49% in just six months to hit 3.96%. This is the first time that this rate has fallen below 4.0%.

Meanwhile, the average five-year rate at 70% LTV has slipped by 0.15% in just one month, while the typical rate at 60% LTV fell by 0.13%.

The table below shows how rates have altered over recent periods. The results indicate that there could well be more investors looking to take out landlord insurance in the near future.

Charlotte Nelson, finance expert at Moneyfacts, said: ‘The reduction in the Bank of England Base Rate to 0.25% has already affected buy-to-let rates, with all LTV’s for five-year deals having reached the lowest on record this month.’[1]

‘With saving rates at record lows, many savers that once used their interest to supplement their income are looking elsewhere and as bricks and mortar is often deemed a safe bet, many are looking to buy-to-let as an investment option,’ she continued.[1]

However, landlords must be savvy about their investment. As Nelson points out: ‘while the costs of obtaining a buy-to-let mortgage are being driven down, there are other costs to factor in.’[1]

These include additional stamp duty charges and changes to mortgage interest tax relief that come into force in 2017.